10 Myths About Credit: Credit Score

Myth: If you have a good credit score you should have no problem obtaining additional credit.

Reality: Although having a good credit score can go a long way, it is not the be all and end all for obtaining additional credit. A credit score is basically a number that is determined by using super complicated algorithms that look at your credit activity. Much of this credit activity can also be found on your credit report. It’s a snapshot in time, expressed as a number.

The problem is a credit score does not capture things like: you income, your net worth, how long you’ve worked for a specific employer. It also doesn’t tell the lender whether you have filed and been discharged from bankruptcy.

A credit score can tell a lot, but it can never tell the whole story. This is why lenders pull up your credit report & score in addition to obtaining other supporting documentation like your income and notice of assessment/ tax return.

Solution: Work hard to maintain a good credit score, but also continue to grow your income and net worth. Keep at least 2 years of your tax return & notice of assessment on file with you at all times. This may be required for many loans. Lastly, if you owe money to Canadian Revenue (CRA), pay that off.

Myth #1 (Joint Credit)

Myth #2 (Credit Report)

Categories: Credit

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1 reply

  1. Good information. Some people mess up their credit scores and it affects them for years.